Energy for You May 5, 2017 Cautionary Statement This presentation - - PowerPoint PPT Presentation
1 st Quarter 2017 Earnings Call Q1 2017 EPS of $0.44 versus $0.36 in Q1 2016 Q1 2017 guidance basis EPS of $0.37 versus $0.32 in Q1 2016 Company reiterates 2017 EPS guidance of $1.25 - $1.33 Potential $250 million increase
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This presentation and the oral statements made in connection herewith contain statements concerning our expectations, beliefs, plans, objectives, goals, strategies, future operations, events, financial position, earnings, growth, costs, prospects, capital investments or performance or underlying assumptions (including future regulatory filings and recovery, liquidity, capital resources, balance sheet, cash flow, capital investments and management, financing costs, and rate base or customer growth) and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or implied by these statements. You can generally identify our forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should,” “target,” “will,” or other similar words. The absence of these words, however, does not mean that the statements are not forward-looking. Examples of forward-looking statements in this presentation include statements about our acquisition of Atmos Energy Marketing, including statements about future financial performance, margin, number of customers and operating income and growth, guidance, including earnings and dividend growth, future financing plans and expectation for liquidity and capital resources and expenditures, tax and interest rates, among other statements. We have based our forward-looking statements on our management’s beliefs and assumptions based on information currently available to our management at the time the statements are made. We caution you that assumptions, beliefs, expectations, intentions, and projections about future events may and often do vary materially from actual results. Therefore, we cannot assure you that actual results will not differ materially from those expressed or implied by our forward-looking statements. Some of the factors that could cause actual results to differ from those expressed or implied by our forward-looking statements include but are not limited to the timing and impact of future regulatory, legislative and IRS decisions, financial market conditions, future market conditions, economic and employment conditions, customer growth, Enable Midstream’s performance and ability to pay distributions, and other factors described in CenterPoint Energy, Inc.’s Form 10-K for the fiscal year ended December 31, 2016 and Form 10-Q for the period ended March 31, 2017 under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain Factors Affecting Future Earnings” and in other filings with the SEC by CenterPoint Energy, which can be found at www.centerpointenergy.com on the Investor Relations page or on the SEC’s website at www.sec.gov. This presentation contains time sensitive information that is accurate as of the date hereof. Some of the information in this presentation is unaudited and may be subject to change. We undertake no
conference calls, webcasts and the Investor Relations page of our website. In the future, we will continue to use these channels to distribute material information about the Company and to communicate important information about the Company, key personnel, corporate initiatives, regulatory updates and other matters. Information that we post on our website could be deemed material; therefore, we encourage investors, the media, our customers, business partners and others interested in our Company to review the information we post on our website. Use of Non-GAAP Financial Measures In addition to presenting its financial results in accordance with generally accepted accounting principles (GAAP), including presentation of net income and diluted earnings per share, CenterPoint Energy also provides guidance based on adjusted net income and adjusted diluted earnings per share, which are non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a Company’s historical or future financial performance that excludes or includes amounts that are not normally excluded or included in the most directly comparable GAAP financial measure. CenterPoint Energy’s adjusted net income and adjusted diluted earnings per share calculation excludes from net income and diluted earnings per share, respectively, the impact of ZENS and related securities and mark-to- market gains or losses resulting from the Company’s Energy Services business. A reconciliation of net income and diluted earnings per share to the basis used in providing 2017 guidance is provided in this presentation on slide 21. CenterPoint Energy is unable to present a quantitative reconciliation of forward-looking adjusted net income and adjusted diluted earnings per share because changes in the value of ZENS and related securities and mark-to-market gains or losses resulting from the Company’s Energy Services business are not estimable. Management evaluates the Company’s financial performance in part based on adjusted net income and adjusted diluted earnings per share. We believe that presenting these non-GAAP financial measures enhances an investor’s understanding of CenterPoint Energy’s overall financial performance by providing them with an additional meaningful and relevant comparison of current and anticipated future results across periods. The adjustments made in these non-GAAP financial measures exclude items that Management believes do not most accurately reflect the Company’s fundamental business
GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, net income and diluted earnings per share, which respectively are the most directly comparable GAAP financial measures. These non-GAAP financial measures also may be different than non-GAAP financial measures used by other companies.
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(1) Refer to slide 21 for reconciliation to GAAP measures and
slide 2 for information on non-GAAP measures
(2) Excluding ZENS and CES mark-to-market adjustments (3) Primarily due to the annual true-up of transition charges
correcting for over-collections that occurred during the preceding 12 months
$0.09 $0.10 $0.27 $0.34
$0.09 $0.10 $0.23 $0.27
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Freeport LNG liquefaction facility construction Source: Freeport LNG
TCOS – Transmission Cost of Service; PUCT – Texas Public Utility Commission; DCRF – Distribution Cost Recovery Factor; ERCOT – Electric Reliability Council of Texas
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FRP – Formula Rate Plan; GRIP – Gas Reliability Infrastructure Program; APSC – Arkansas Public Service Commission; RRC – Texas Railroad Commission
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Customer count does not include natural gas customers that are under residential and small commercial choice programs invoiced by their host utility
2013 2014 2015 2016 2017E
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Source: Enable Midstream Partners, May 3, 2017, Press Release and Q1 Earnings Call. Please refer to these materials for an overview of Enable’s Q1 2017 performance
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$0.28 $0.31 - $0.37 $0.88 $0.93 - $0.97
* 2017 Guidance of $1.25 - $1.33 assumes that earnings from Utility Operations and Midstream Investments will not both be at the top or bottom end of their respective ranges
(1) Refer to slide 22 for reconciliation to GAAP measures and slide 2 for information on non-GAAP measures (2) As provided on Enable Midstream Partners’ 1st quarter 2017 earnings call on May 3, 2017
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(1) Houston Electric’s customer count increased by 49,409 from 2,364,784 as of March 31, 2016 to 2,414,193 as of March 31, 2017 (2) Q1 2016 TDU core operating income represents total segment operating income of $83 million, excluding operating income from transition and system restoration bonds of $24 million (3) Includes rate increases of $16 million related to distribution capital investments and lower net transmission-related revenues of $2 million (4) Includes lower equity return of $6 million, primarily due to the annual true-up of transition charges correcting for over-collections that occurred during the preceding 12 months, lower
usage of $4 million primarily due to milder weather, and higher operation and maintenance expenses of $2 million
(5) Q1 2017 TDU core operating income represents total segment operating income of $78 million, excluding operating income from transition and system restoration bonds of $20 million
2% YoY Customer Growth (1)
(2) (3) (4) (5)
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(1) Natural Gas Distribution’s customer count increased by 28,672 from 3,417,875 as of March 31, 2016 to 3,446,547 as of March 31, 2017 (2) Rate increases of $13 million, primarily from the Texas GRIP filing of $5 million and the Arkansas rate case of $6 million (3) Includes Minnesota property tax refund of $9 million and higher depreciation and amortization expense of $4 million primarily due to ongoing additions to plant in service (4) Includes lower usage of $15 million, primarily due to milder weather effects, partially mitigated by weather normalization adjustments and weather-related decoupling
(2) (3) (4)
1% YoY Customer Growth (1)
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$0.23 $0.27 $0.02 $0.03 ($0.01) $0.00
$0.20 $0.21 $0.22 $0.23 $0.24 $0.25 $0.26 $0.27 $0.28 $0.29 $0.30 Q1 2016 Utility Guidance EPS Core Operating Income
Interest and Preferred Investment Equity Return Other Q1 2017 Utility Guidance EPS
(1) Excludes equity return; please refer to slide 20 for more detail on core operating income (2) Includes Q1 2017 income from investment in Enable Midstream Series A Preferred Units of $9 million and interest expense reduction of $9 million; excludes
transition and system restoration bonds
(3) Lower equity return of $6 million, primarily related to the annual true-up of transition charges correcting for over-collections that occurred during the preceding
12 months
(4) Taxes, equity AFUDC, other income and Other Operations segment
Note: Refer to slide 21 for reconciliation to GAAP measures and slide 2 for information on non-GAAP measures
(1) (2) (3) (4)
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$0.23 $0.27 $0.09 $0.04 $0.00 $0.01 $0.10 $0.00 $0.04 $0.08 $0.12 $0.16 $0.20 $0.24 $0.28 $0.32 $0.36 $0.40 Q1 2016 Guidance EPS Utility Operations Improvement Tax Adjusted Net Income from Enable Fair Value of Commodity Derivatives Q1 2017 Guidance EPS
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Utility Operations Midstream Investments
$0.32 $0.37
Midstream Investments Utility Operations
(1) See previous slide (2) Uses an ownership percentage of 55.4% for Q1 2016 and 54.1% for Q1 2017 (3) Fair value adjustments for commodity derivatives provided no EPS benefit in Q1 2016 and increased earnings by $0.01 in Q1 2017 (4) Midstream Investments components adjusted for the effective tax rate
Note: Refer to slide 21 for reconciliation to GAAP measures and slide 2 for information on non-GAAP measures
(1) (2) (3)
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(1) 2017 – 2021 consolidated capital plan includes planned capital investment of approximately $7.0 billion; expected $250 million capital investment
related to the proposed transmission project in the Freeport, Texas area would be incremental to the previously disclosed five-year capital plan
(2) Refer to slide 2 for information on non-GAAP measures
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($ in millions)
DCRF – Distribution Cost Recovery Factor; TCOS – Transmission Cost of Service; TBD – to be determined
(1) Represents proposed increases when effective date and/or approval date is not yet available. Approved rates could differ materially
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($ in millions)
10618, 10619
10567
06-161-U
17-010-FR
GRIP – Gas Reliability Infrastructure Program; BDA – Billing Determinant Rate Adjustment; FRP – Formula Rate Plan; TBD – to be determined
(1) Represents proposed increases when effective date and/or approval date is not yet available. Approved rates could differ materially (2) In addition to requesting the change in rates, Natural Gas Distribution proposed consolidation of the Houston and Texas Coast divisions into a Texas Gulf division
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($ in millions)
G008/GR-13- 316
U-34251, U-34249
PUD201700078
PUD201700078
RSP – Rate Stabilization Plan; EECR – Energy Efficiency Cost Recovery; PBRC – Performance Based Rate Change Plan; TBD – to be determined
(1) Represents proposed increases when effective date and/or approval date is not yet available. Approved rates could differ materially (2) Amounts are recorded when approved
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Operating Income ($ in millions) Quarter Ended March 31, 2017 Quarter Ended March 31, 2016 Difference Fav/(Unfav) Electric Transmission and Distribution 78 $ 83 $ (5) $ Transition and System Restoration Bond Companies (20) (24) 4 TDU Core Operating Income 58 59 (1) Energy Services 35 6 29 Mark-to-market (gain) loss (15) 9 (24) Energy Services Operating Income, excluding mark-to-market 20 15 5 Natural Gas Distribution Operating Income 164 160 4 Core Operating Income on a guidance basis 242 $ 234 $ 8 $
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Net Income (in millions) Diluted EPS Net Income (in millions) Diluted EPS Consolidated net income and diluted EPS as reported 192 $ 0.44 $ 154 $ 0.36 $ Midstream Investments (45) (0.10) (37) (0.09) Utility Operations (1) 147 0.34 117 0.27 Timing effects impacting CES(2): Mark-to-market (gains) losses (net of taxes of $5 and $3)(3) (10) (0.02) 6 0.01 ZENS-related mark-to-market (gains) losses: Marketable securities (net of taxes of $16 and $32) (3)(4) (28) (0.06) (58) (0.13) Indexed debt securities (net of taxes of $4 and $20) (3) 6 0.01 36 0.08 Utility operations earnings on an adjusted guidance basis 115 $ 0.27 $ 101 $ 0.23 $ Adjusted net income and adjusted diluted EPS used in providing earnings guidance: Utility Operations on a guidance basis 115 $ 0.27 $ 101 $ 0.23 $ Midstream Investments 45 0.10 37 0.09 Consolidated on a guidance basis 160 $ 0.37 $ 138 $ 0.32 $
(1) CenterPoint Energy earnings excluding Midstream Investments (2) Energy Services segment (3) Taxes are computed based on the impact removing such item would have on tax expense (4) As of May 18, 2016, comprised of Time Warner Inc., Charter Communications, Inc. and Time Inc. Prior to May 18, 2016, comprised of Time Warner Inc., Time Warner Cable Inc. and Time Inc.
March 31, 2017 March 31, 2016 Quarter Ended
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Net Income (in millions) Diluted EPS Consolidated as reported 432 $ 1.00 $ Midstream Investments (121) (0.28) Utility Operations (1) 311 0.72 Timing effects impacting CES(2): Mark-to-market losses (net of taxes of $8)(3) 13 0.03 ZENS-related mark-to-market (gains) losses: Marketable securities (net of taxes of $114) (3)(4) (212) (0.49) Indexed debt securities (net of taxes of $145) (3)(5) 268 0.62 Utility operations earnings on an adjusted guidance basis 380 $ 0.88 $ Adjusted net income and adjusted diluted EPS used in providing earnings guidance: Utility Operations on a guidance basis 380 $ 0.88 $ Midstream Investments 121 0.28 Consolidated on a guidance basis 501 $ 1.16 $
(1) CenterPoint Energy earnings excluding Midstream Investments (2) Energy Services segment (3) Taxes are computed based on the impact removing such item would have on tax expense (4) As of May 18, 2016, comprised of Time Warner Inc., Charter Communications, Inc. and Time Inc. Prior to May 18, 2016, comprised of Time Warner Inc., Time Warner
Cable Inc. and Time Inc.
(5) Includes amount associated with the Charter Communications, Inc. and Time Warner Cable Inc. merger
December 31, 2016 Twelve Months Ended